0% doesn't always mean 0%

[kootch88]

Kootch, I think you missed the point.

When I see an advertisement for 0% interest for 60 months, I am not expecting to see a $4,000 increase in the sales price if I choose those terms.

The price of the tractor should be the price of the tractor, period. Be it cash, financed or what have you. The price of the tractor should have a profit built into it for the tractor itself. If I finance it then the interest I pay is the profit the financial arm makes for floating the money of the loan.

If they aren't able, or willing to offer the same price at 0% then it is simply NOT 0% and the impression left is one of less than honorable intent.

This business of price being dependent on the financial terms you choose is less than honest in my opinion.

The bottom line is simply that Mahindra advertises 0% interest when in fact it really isn't. You get a jacked up price and are expected to pay that difference up front, so it is NOT 0% in any stretch of the word.

I tell ya, after this conversation and reading some of the posts here, if any of the other brands of tractor offered anything remotely close to the capabilities of the 5035 and in the same ballpark pricewise, I'd be choosing not to buy the Mahindra. That, however isn't the case. Sooo, when I am ready to buy in the next couple of months it will be a 5035, but I will not be using their financing, or their "0%" BS offer. I will negotiate cash price and use my own financial institution.

I was answering a question from Dave. I said 'pleased' because as long as someone gives me up front information, regardless of how they are interpreting that information, I can make more informed decisions. I started the thread and still think the 0% thing is baloney and based on 30 years of buying new items the 0% fee charge being justified is also baloney. If you read my posts, including the original post starting this thread, you will see what I think of the Mahindra sales practice. Good thing I love the tractor, because they nearly lost a customer before they even had me.

 

[LAWALLSTRACTOR]

Mahindra being "up front" is not exactly the description I would use. Their 0% financing is nothing more than an elaborate scam designed to hide the true interest rate, as evidenced by having different tractor prices for cash v/s financing. Not to mention the fact that Mahindra seems to think something as simple as posting MSRP prices is a state secret.

Hiding things only makes them look dishonest. IMO

I see Massey running a 0% or (and I emphasize OR) free loader. It is the same thing, buying the 0% finance with the value of the loader.

 

[Ram4x4]

Mahindra is just being up front about the whole thing, it isn't any different than the competition offering 0% or a rebate.

"Just being up front"?????

Up front about what? That 0% isn't really 0%?

That they advertise 0%, but they're going to wait til you come in to buy and hit you with the "got'cha" that in reality you're going to pay more because it really isn't 0%??

 

[LAWALLSTRACTOR]

"Just being up front"?????

Up front about what? That 0% isn't really 0%?

That they advertise 0%, but they're going to wait til you come in to buy and hit you with the "got'cha" that in reality you're going to pay more because it really isn't 0%??

They advertise it as 0% with value pricing, and 4.25% with rock bottom pricing and it is up to the dealer which price they decide to start out with.

 

[DavesTractor]

"Just being up front"?????

Up front about what? That 0% isn't really 0%?

That they advertise 0%, but they're going to wait til you come in to buy and hit you with the "got'cha" that in reality you're going to pay more because it really isn't 0%??

This is how pretty much all 0% deals have worked for years. I say "pretty much" because we have heard of a few exceptions. The automotive world, all brands, have been doing this for years. There really is no "gotcha". But I do really appreciate your perspective, sincerely. It helps us know how people think.

I think if all the tractors were advertised at a price point where the dealer could absorb the buydown, and we offered a huge discount for cash or standard rate, that soulds better. You never see Ford or Toyota advertising that you have to pay extra for 0%....that doesn't sound good, but they do offer thousands off for cash. Same thing.

I think Mahindra's method is more upfront and honest. But it is true that based on the best cash price, 0% isn't free. Someone commented on how it is similar to points on a home mortgage loan. That is a fair analogy.

Let's do some math. Say a Max 22 or Max 25 package comes to $15K financed after whatever down payment, and that is at the 0% price. 0% for 60 months would cost $1375, since the tractor was priced that much higher. 4.25% for 60 months (to keep the term length the same, you can go to 84) a financed amount of $15k less $1375, $13,625 financed. If you ran the loan to full term, the interest would be $1523. Now at standard rate, same 60 months, you get an additional rebate of $400, so lets say the financed amount is now $13,225 at 5.8%. You would pay $2042 in total interest.

So $1375 for 0%, $1523 for 4.25%, and $2042 for standard rate. The kicker is that if you pay off the non-0% loans a little early, it would not be hard to get your total interest down below $1375. If you plan to run it to full term, the 0% is better in this example. And if you put more down payment, that changes things as well. You would have to do the math on the 5035. The 5035 has huge discounts on it right now for cash or standard rate.

Of course for many people it is not just the total interest, it is the payment. For that, 4.25% for 84 months gives the lowest payment. If you have very good credit they will go 84 months.

 

[Ram4x4]

Well, you can play your numbers game all you want, but 0% is NOT 0% in this case.

If I finance at it for say, 72 months at X % interest and the number you give me is the total I end up paying for it, that's one thing, because that tells me total cost (i.e. price + interest paid over the term of the loan). However, if I choose financing for 72 months at 4.25% and then you turn around tell me not only am I paying the interest on the loan but the price of the tractor just went up as well, I'm not going to be a happy camper.

I'm well aware of the games car dealers play too. I'm disappointed the same game is being played by tractor dealers as well.

As I said, it shouldn't matter how I choose to finance the tractor, the price should be the same. The price of the tractor should include the dealer's profit in it. If the price is $25,000 then it should be $25,000 if I pay cash or finance it for 60 months, 72 months or what have you. The dealer still gets $25,000 for the tractor and the finance company makes its profit from the interest I pay on the loan.

If you tell me the interest rate is 0% for 60 months then I expect that the tractor would still be $25,000 and that amount would be divided by 60 with zero interest on the loan.

Of course, sales tax added where applicable.

That is how "I" perceive it when a company tells me it's 0% interest. Yeah, excellent deal, IF it is truly what they are advertising.

 

[logdog]

For what its worth, it seems to me they always say "0% in lieu of other incentives". Doesn't matter if talking cars or tractors. Plus that seems to be the way I see it advertised. I don't know about Mahindra because I never see any of their ads but I know others do it that way. When I bought my Kubota the price was the same either way but I had to choose free loader or 0% on my Kioti. I couldn't get both. I agree it can be frustrating but I personally haven't felt any dealers were trying to pull one over on me.

 

[jcdogfish]

I just went through this with JD, Mahindra and Kubota. At JD I was quoted a price, and 0 percent the price was higher. also, when you backed out the options the price went up. Probably got 4 or 5 different prices on the same machine from the same dealer. Of course Mahindra had the buydown. For me the better way is to post the 0 percent price and the payment amount and offer a rebate if you pay cash or take care of your own financing. On the Mahindra looks like my cash price after trade will be $ 2462 less than the 0 percent financing. thats on less than 5k after trade in (including the insurance) I think I'll be paying cash on this one.

 

[Spencer C]

I'm a dealer for a brand other than Mahindra, but I believe the idea of dealers playing pricing games is being overstated. The dealer has no control over finance and rebate options. These come directly from the manufacturer, and the dealer must sell equipment within the program paramaters setforth.

As a Kubota dealer, we have a $0 down/ 0% interest program or a cash rebate. We can argue from every angle about wether this is a true 0% program or not, but at the end of the day those are the options given to us by Kubota (insert any manufacturer here).

There was a time when Kubota provided no rebate for cash, and many cash buyers complained. Now they have a cash rebate, and others complain that it now means 0% ins't a true 0%. Pleasing one contingency upsets another, and vice versa.

I can't imagine a reality where a finance company hires a full staff, pays them nothing, and risks money on loans for no financial return whatsover. That's what a "true 0%" from a finance company would look like.

 

[teg]

I'm a dealer for a brand other than Mahindra...

That's a good explanation... although I don't like it... like car dealers, it's the game that is played.

Call it a cash "rebate", but others will see it as paying the interest upfront. I don't think it will change. Hopefully, some of the dealers will be able to "read" their costumer and figure out what category they fall into... I enjoyed this thread... I like to hear the dealer's point of view of this. :thumbsup:

 

[AchingBack]

Overall, it appears Mahindra is doing the most it possibly can to get people into a tractor. Some folks are limited as to how much they can pay per month. The plans seem to offer ample options to make it possible. It is up to each of us to scrutinize contracts before signing. If the buyer feels something is awry, they should have a friend, or attorney look it over first.

 

[DavesTractor]

I'm a dealer for a brand other than Mahindra, but I believe the idea of dealers playing pricing games is being overstated. The dealer has no control over finance and rebate options. These come directly from the manufacturer, and the dealer must sell equipment within the program paramaters setforth.

As a Kubota dealer, we have a $0 down/ 0% interest program or a cash rebate. We can argue from every angle about wether this is a true 0% program or not, but at the end of the day those are the options given to us by Kubota (insert any manufacturer here).

There was a time when Kubota provided no rebate for cash, and many cash buyers complained. Now they have a cash rebate, and others complain that it now means 0% ins't a true 0%. Pleasing one contingency upsets another, and vice versa.

I can't imagine a reality where a finance company hires a full staff, pays them nothing, and risks money on loans for no financial return whatsover. That's what a "true 0%" from a finance company would look like.

Well said, thanks Spencer.

 

[ACDNate]

Let me preface my comments by saying I haven't bought a tractor but am researching and shopping around. The advertised pricing differences based on financing did throw me for a loop, much like the original poster.

The big difference I'm seeing here between what's being said about tractor financing and auto financing is presentation. If you go into a dealership looking for a car during a 0% financing special, there won't be much discussion about the 0% financing till things are wrapping up. Dealerships build those financing costs into your price w/o highlighting it like the tractor dealers apparently do.

It's all perception of the customer. If dealers treated every deal as a 0% financing deal when negotiating price and didn't drop the bigger discounts until a cash sale was clearly specified this topic wouldn't ever come up.

 

[Ram4x4]

I can't imagine a reality where a finance company hires a full staff, pays them nothing, and risks money on loans for no financial return whatsover. That's what a "true 0%" from a finance company would look like.

Then it's really simple, don't advertise a 0% interest program if it isn't 0%.

How hard is that?

I understand dealers hands are tied when the company dictates it, my argument is in general, if it's the company then it's the company, but I know for a fact that some dealers are taking advantage of the situation to mark things up even more...which only adds further to the skeptical eye that many buyers have.

I agree SOME of it has to do with how a dealer communicates the price. If I ask for the price of the tractor and he tells me "$25,000 cash" then to me, that is the price, period. As soon as I say finance it he now has to back pedal and explain how or why the price is going to be higher. that isn't winning any customers.

What he should do is tell me the price of the tractor as it sits, before any rebates, cash incentives or any other hullabulla names you want to apply to it.

He should then tell me what the interest rates are for financing it over the various range of months (but the price should not go up!)

Then he should tell me, however if you pay cash, the price will be discounted X$$$.

Then, if he tells me there is a 0% interest for 60 months program, the price SHOULD STILL BE THE SAME as it was initially quoted.

I'm betting few people, if any actually pay cash for something like a tractor. To start off quoting the cash price, including all incentives and NOT tell the customer that price includes those incentives is not a good way to gain their confidence, primarily because you are now going to have to explain a higher price when/if they want to talk financing.

And whatever you do, do not tell someone you have 0% interest and then quote them an even higher price if they choose that option...and then expect them to pay that interest up front in cash!

 

[rockshaft]

X2
It may or may not be the norm- but its false advertising any way you look at it in my book.

Then it's really simple, don't advertise a 0% interest program if it isn't 0%.

How hard is that?

I understand dealers hands are tied when the company dictates it, my argument is in general, if it's the company then it's the company, but I know for a fact that some dealers are taking advantage of the situation to mark things up even more...which only adds further to the skeptical eye that many buyers have.

I agree SOME of it has to do with how a dealer communicates the price. If I ask for the price of the tractor and he tells me "$25,000 cash" then to me, that is the price, period. As soon as I say finance it he now has to back pedal and explain how or why the price is going to be higher. that isn't winning any customers.

What he should do is tell me the price of the tractor as it sits, before any rebates, cash incentives or any other hullabulla names you want to apply to it.

He should then tell me what the interest rates are for financing it over the various range of months (but the price should not go up!)

Then he should tell me, however if you pay cash, the price will be discounted X$$$.

Then, if he tells me there is a 0% interest for 60 months program, the price SHOULD STILL BE THE SAME as it was initially quoted.

I'm betting few people, if any actually pay cash for something like a tractor. To start off quoting the cash price, including all incentives and NOT tell the customer that price includes those incentives is not a good way to gain their confidence, primarily because you are now going to have to explain a higher price when/if they want to talk financing.

And whatever you do, do not tell someone you have 0% interest and then quote them an even higher price if they choose that option...and then expect them to pay that interest up front in cash!

 

[BungeeII]

0% never means 0% if you think it means that a lender isn't going to make money. Every manufacturer has incentives.... there's 8 pages of people acknowledging that. 0% is an incentive for one buyer. Cash, out-the-door, bottom-dollar pricing is incentive for another. Very rarely will you see all incentives bundled into one, glorious transaction. That's one of the reasons "buying/pricing" forums are so popular.

I bet the guys here could all come up with a "remember when" story... like the Bobcat CT230's or whatever they were a couple years ago. It just doesn't happen with regularity.

Maybe you don't get the number of furniture ads we do around here.... Between sales tax, interest, overstock, delivery and every other reduction they try to draw people in with... Nothing is free. You might get a couch with free delivery, no sales tax, free removal of the old couch, no interest for 4 years, all while on sale @ 50% off for a grand total of $500. What you really got, though, was a $200 couch with a whole lot of advertising.

 

[rockshaft]

If the lender is an arm of the manufacturing company- it could be good for business to sell more machines. Its a marketing tool, and there is absolutely no reason to piss off even one customer by using any marketing tool.

 

[Ram4x4]

0% never means 0% if you think it means that a lender isn't going to make money. Every manufacturer has incentives.... there's 8 pages of people acknowledging that. 0% is an incentive for one buyer. Cash, out-the-door, bottom-dollar pricing is incentive for another. Very rarely will you see all incentives bundled into one, glorious transaction. That's one of the reasons "buying/pricing" forums are so popular.

Well, interest is how a lender makes money, isn't it?

If you advertise 0% then that tells me you, as the lender are making 0 dollars on the loan. If the lender is an arm of the same company, guess what? The company still makes money on the sale of the tractor, right?

I have seen real 0% interest deals on other items. The company still makes money on the item when sold.

I worked part-time at Home Depot a number of years ago to finance the purchase of my woodworking tools. I spent some time in the shipping and receiving department. What an eye opener. Most people don't know that these places make very little profit on the big, expensive items, like mowers, etc, but they soak you on the mark-up of the small items like nuts and bolts, light bulbs, small hand tools, etc. It was not uncommon for them to put items on sale at or even below their cost just to get you in the store because they figured while you were there you'd spend money on other items.

The bottom line is simple. You can call it what you want. You can make excuses and talk about "reality" but advertising 0% interest when it is not truly 0% is false advertising. People, i.e. potential customers, aren't stupid. I dare say a lot of people aren't or would not be happy with such a "deal".

As for incentives, that's great, but that isn't the issue with advertised "0%" programs.

Anyway, this horse has been beaten to death. I've had my say. I don't expect anything will change from the dealer or company end.

 

[droptop]

It's safer to beat dead horses, they don't kick or bite.:laughing:

 

[Ram4x4]

Heheheh, true!